In an effort to "rationalize Medicare payments and subsidies," the administration proposes to eliminate duplicate payments for certain medical education expenses in the case of Medicare Advantage payment rates for a savings of $4.4 billion. Reducing payment rates for certain conditions treated in skilled nursing facilities and inpatient rehabilitation facilities would save $2.9 billion. Establishing a 13-month rental period for power wheelchairs would save $530 million, while reducing the rental period for oxygen equipment from 36 to 13 months would save $2.4 billion. Extending Medicare secondary payer status for ESRD from 30 to 60 months would save nearly $1.1 billion. Lastly, Medicare would save about $7 billion by phasing out payments for bad debt incurred by providers.

Radiologists would be directly affected by a proposal where Medicare payments to all providers would be reduced by 0.4 percent once the Medicare Trustees issue a "fund warning," which is expected in the next 12 months. A provision in the Medicare Modernization Act of 2003 requires the Trustees to issue a warning if general fund contributions exceed 45% of overall Medicare expenditures, and requires Congress to act within a certain time period. This proposal would only apply if Congress fails to enact other funding changes after the warning is issued.


An additional $10.2 billion in savings would come from administrative changes in the Medicare program to improve efficiency, productivity and program integrity.

The President's budget proposal cuts the Medicaid program by $13 billion through legislative revisions such as reducing payments for administrative costs, cutting pharmacy reimbursement and making it more difficult for owners of valuable homes to qualify for the program.

$12.7 billion would be cut through administrative changes, which include cutting $5 billion in payments to providers, eliminating $3.6 billion in certain payments for school-based services, cutting $2.2 billion in payments for rehabilitation services, and slashing $1.8 billion in payments for graduate medical education.

In total, the proposal adds up to $102 billion in cuts to both programs over five years. Last year the President's budget contained nearly $40 billion in proposed cuts, very few of which were enacted by the Republican controlled Congress. The initial reaction from Democrats has been negative and they are calling the proposal an assault on the nation's elderly and needy.

A summary of the entire proposed budget for the Department of Health and Human Services can be viewed at http://www.dhhs.gov/budget/08budget/2008BudgetInBrief.pdf.


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